Talking about strategy » private equity

Another dot-com bubble?

Kim Warren — Wed, 08 Jun 2011 07:25:51 +0000

Back in 1999 I got booed for saying the dot-com boom was mostly hot air, after which the NASDAQ dropped from 1000 to 200. The Economist now warns of a 2nd bubble,with private equity and big corporates falling over each other to throw cash at anything web-ish. Many of the new ventures will be great, but most will fail, due to poor understanding of whether business models are viable – which needs a sound system-model of the business.
As noted before, certified analysts are not required to understand anything about the link from strategy to performance, so we can be sure disasters will follow, as we see the NASDAQ drive up from 300 to 600 …
For a route to sound strategy and business models, see www.strategydynamics.com.

Good strategy from big listed firms

Kim Warren — Sun, 03 May 2009 09:01:35 +0000

I have been tough on the poor strategy seen over both of the last two boom-bust cycles, so good to see in Sensible Giants from the Economist that the largest listed firms have disproportionately little debt compared with both smaller listed peers and private firms.

It seems that these large firms are both:

more able to fight off the stupid urgings of naive analysts who pushed less powerful companies to take on more debt to pursue unsustainable growth, with the implicit threat that they would otherwise be targeted for acquisition, and
less tempted into the same over-gearing that underpinned the philosophy of the less thoughtful private equity firms.

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